Insights on the music industry by a group of international students

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Internet Radio Royalties

Recently streaming services like Pandora and iHeartRadio have started facing a problem of royalty payments going up for internet radio streaming services. While most people think both will survive the inflated prices they will have to be paying artists it may give their competitors like Sptofiy (who negotiate directly with labels) a chance to keep their premium streaming services lower than that of Pandora.

Pandora says that it pays out $446 million dollars to music makers out of its some $921 million dollar revenue. With prices for each time a song is played being only around $.0013 a play and $.0023 a play on premium it seems ridiculous that Pandora could be complaining about paying out more money. Typical to every business situation the government is doing exactly what Pandora doesn’t want but what every artist wants which is a higher rate being paid out to SoundExchange. However Pandora wants the rates lowered because they are typical greedy business people looking to make more money off of their artists hard work.

The overriding concern for Pandora is narrow margins. If the payout rises too much more Pandora might find themselves underwater. However Pandora doesn’t have the best business model. In many ways Spotify has them beat with their two mobile streaming and on your computer streaming services. With Apple Music now up and running with a more exclusive catalog it doesn’t seem like there is much Pandora will be able to do to compete. Even though insider sources say they will survive this inflation, what about the next?